FRANKFURT • Deutsche Bank's securities unit posted a loss in the fourth quarter, with each of the businesses reporting a slump in revenue as co-chief executive officer John Cryan scales back trading activities to bolster returns.
The loss of €1.15 billion (S$1.8 billion) in the period compares with a pretax profit of €323 million a year earlier, the firm said yesterday.
Revenue at the corporate banking and securities unit slumped 30 per cent to €2.1 billion, with a negative return on equity.
Mr Cryan, 55, who took over as co-CEO from Mr Anshu Jain last July, is shrinking the debt trading empire built by his predecessor as part of a pledge to bolster capital levels and boost profitability.
While the last three months of the year are typically the weakest for investment banks, his task has become even harder as the market upheaval that hit trading at the end of last year spilled into this year amid cooling emerging-market growth and a slump in oil prices.
"Deutsche Bank's official outlook for 2016 is little inspiring and confirms that it will be another difficult year," said Mr Tomasz Grzelak, a Zurich-based analyst at Mainfirst Bank with a neutral recommendation on the shares. "Deutsche Bank will remain highly reliant on the performance of the investment banking business and worrying signals from this division further mute short-term prospects."
The bank's shares have dropped about 25 per cent this year.
Mr Cryan said on a call with analysts yesterday that he does not see a need to raise capital.
Deutsche Bank posted a net loss of €6.8 billion for last year, its first annual shortfall since 2008, as it wrote down the value of the investment and consumer banking units and set aside money for litigation.
At the investment bank, which generates most of the revenue, legal costs rose to €335 million in the fourth quarter from €42 million a year earlier. Debt and currency trading, the division's biggest source of income, declined 16 per cent to €947 million.